T-Mobile
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US Inc. said it is acquiring a streaming-video startup and will launch its own paid-television service, becoming the latest company to jump into the increasingly crowded online-video market.

The nation’s third-largest wireless carrier by subscribers said Wednesday it is buying Layer3 TV Inc., a pay-TV distributor that has targeted high-end video customers with networks delivered over the internet. Terms weren’t disclosed.

The move follows other companies, including Sony Corp., Dish Network Corp. and YouTube owner Alphabet Inc., that have launched internet-based video services that target cable-TV cord-cutters. Wireless rival AT&T Inc. has signed up one million customers for its DirecTV Now streaming service, which it launched last year and costs as little as $35 a month.

T-Mobile said it plans to launch its television offering to cellphone and home-internet customers nationwide next year, but the company didn’t disclose major details, including how much the new service will cost. It plans to make the service available to customers who aren’t on T-Mobile’s network.

Layer3 is currently available in five cities in the U.S., and its service starts at $75 a month.

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T-Mobile executives said the new service can carry all of Layer3’s available content, which include channels from 21st Century Fox Inc., Comcast Corp.’s NBCUniversal and Walt Disney Co.

Unlike Hulu and Netflix, which deliver their stream to consumers through the commercial internet, Layer3 has been renting access to privately managed networks, which is more costly, but which it says results in better streaming quality. Layer3’s approach is still more affordable than the capital-intensive proposition of stringing wires across the country like a traditional cable company.

Layer3 had raised more than $100 million from investors including Altice NV, Evolution Media Partners, North Bridge Venture Partners, Paulson & Co. and TPG Growth.

T-Mobile Chief Executive John Legere said the purchase had been in the works for a while and would have gone through with or without a merger with Sprint Corp., a potential wireless tie-up the companies abandoned earlier this year.

Mr. Legere said the new service will be available on phones as well as on third-party portals like Apple TV, though the company hasn’t yet struck deals with those middlemen.

Analysts say most online-TV packages have struggled to generate a meaningful profit for their owners. T-Mobile executives said their offering will be different.

“We’re going to create a variety of offers that will, of course, include some low-cost offers,” said operating chief Mike Sievert, adding that the service should generate a return by combining subscription fees with advertising.

Corrections & Amplifications T-Mobile is the nation’s third-largest wireless carrier. A previous version of this article incorrectly stated it was the fourth largest. (Dec. 13)